CTH noted several months ago, end the Marshall Plan for Europe and things will change quickly.
Germany is in a tight economic place as a result of: (1) former leftist Chancellor Olaf Scholz alignment with climate change policy, radically changing the German energy base and driving up costs; (2) the financial support for Ukraine; (3) the financial burden of mass African/ME migration, and (4) the new Trump-era EU tariffs that effectively end the Marshall Plan.
Put all four elements together and the German economic contraction is only forecast to worsen. This is the reality that current German Chanceller Fredrich Merz is facing. Thus, as a non-pretending former businessman, Merz recently told his party and the German electorate that current financial conditions no longer support the expansive entitlement state.
Pensions, benefits and even healthcare are potentially going to be impacted. Germans are not happy.
GERMANY – The German welfare state is no longer financially sustainable, Friedrich Merz said on Saturday. The chancellor argued for a fundamental reassessment of the benefits system as spending continues to soar past last year’s record of €47bn (£40bn).
In a state-level party conference meeting on Saturday, Mr Merz said: “The welfare state as we have it today can no longer be financed with what we can economically afford.”
Once the export champion of Europe, Germany’s economy has slowed dramatically since 2017, with GDP growing by only 1.6 per cent since then versus 9.5 per cent for the rest of the eurozone.
Germany’s economy shrank by 0.2 per cent last year following a 0.3 per cent dip in 2023 – the first time since the early 2000s the economy has retreated two years in a row.
Industrial production fell under the Left-leaning “traffic light” coalition of Olaf Scholz and continues to slide under the new government, with GDP declining by 0.3 per cent in the second quarter of 2025.
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